Berkeley-Haas Thought Leaders Explore Innovation at Shanghai Conference

More than 300 business leaders and Berkeley-Haas alumni gathered at the Shanghai Peninsula Hotel for the Berkeley Asia Business Conference on March 22, 2011, organized by Haas School Professor Teck Ho. Key themes of the conference included capabilities of innovative leaders, perspectives on organizational innovation over time, and customer-centric innovations through pricing models and in healthcare/biopharma. Keynote speakers included the Haas School’s Nobel Laureate Oliver Williamson, alumnus Joe Jimenez, MBA 84, CEO of Novartis, Professor Michael Katz, and Dean Rich Lyons.

Dean Rich Lyons on Creating Pathbending Leaders

Rich Lyons wrapped up the Berkeley Asia Business Conference with his keynote on the kinds of leaders business schools and organizations need to develop to bend the paths of unsustainability facing us in our kids’ lifetimes, if not our own. Examples, he said, include education, carbon, global access to safe water, obesity, and — picking up on the keynote of Joe Jimenez, CEO of Novartis, earlier in the day – growth in healthcare expenditure.

A straight line extrapolation of these unsustainabilities will not work, said Lyons, and bending these paths will primarily be the work of the commercial sector. So, what can we do to develop these pathbending leaders within our lifetimes in our schools and in your organizations.

Firms get paid to be different, to produce useful differentness – not just product, service, technological innovation. Oliver Williamson helped us understand how we organize for creating this kind of usefulness, Lyons said. And Michael Katz talked about how firms can create differentness through their revenue models. A pathbending leader is someone who creates useful differentness in the firm on a broader level.

Lyons cited culture as a key ingredient in creating pathbending leaders with an anecdote in which one of our Berkeley-Haas alumni, the COO of a major VC firm, was visited by a delegation that wanted to know the secret ingredient to Silicon Valley’s success and then added, “and don’t say culture, because we’ve heard that before.” The alum responded, “then I don’t have much to say.”

Reciting one of the Haas School’s four defining principles — Question the Status Quo — Lyons closed the conference by asking the audience: “What culture would you create if you wanted to produce path-bending leaders?”

Haas Professor Michael Katz on How the Right Revenue Model Can Increase the Value of a Product

A product’s price may do more than just signal how much it is worth or how many one should buy. According to Prof. Katz, revenue model innovations have shown that – if applied appropriately — pricing strategies can actually increase the actual value of the product to customers.

Haas Professor Michael Katz used a dating service for married people as one of his examples to illustrate this concept. The firm assumed that men in a dating service would be more likely to send many messages to the women in the service, which would scare women interested in the service from signing on. As a result the dating service charges men for each individual message they send to women in the network. Paying for each message encourages men to send only the messages they are serious about, which makes the service more enticing for women to sign on. Having more women in the network then increases the dating service’s value to the men and thus increases the revenue for the dating service.

In developing revenue models for their products, Katz advised the entrepreneurs and marketers in the room not to expect to get it right the first time around and to keep experimenting to see what works best.

Novartis CEO Jimenez Outlines Innovation Strategy to Improve Patient Outcomes

A brief video highlighting the many deaths due to diarrhea, infections, obesity, malaria, and other easily treatable or preventable diseases set the stage for the keynote by Novartis CEO Joe Jimenez, MBA 84. Mr. Jimenez described his company’s recent shift in strategy to apply innovations that help create positive patient outcomes.

His examples included tools to help patients manage their own health. For example a blood pressure cuff that helps physicians monitor patients’ consistent use of blood pressure medication and avoids needless complications.

In R&D, Jimenez said his company now follows the science. In other words, if the research is there, it will pursue drug development no matter how small the patient pools is because it has found that results from such research can often be applied to other diseases.

To overcome the challenge of getting the drug to patients in places like rural Africa, Novartis takes advantage of widely used cell phone technology to ensure that patients can get the drug when they make the journey to the clinic. Using SMS technology, Novartis was able to drop incidents of being out-of-stock from 25 to 1% in a few months. Novartis distributes anti-malaria drug, for free in Africa.

Finally, Jimenez said distributing its malaria drug in Africa for free is one example of the company’s social responsibility effort.

Jimenez was introduced by Berkeley MBA classmate Jeffrey Hines, MBA 84, COO of China Construction Bank.

Nobel Laureate Oliver Williamson offers his perspective of entrepreneurship through the eyes of the transaction cost economist.

Weaving in stories from his earlier days as a student instructor at Carnegie Mellon University to how he proposed to his wife, Williamson provided a framework to how the study of entrepreneurship has developed over time.

Williamson differentiates between technological and organizational innovation. He focused his exploration on five key organizational innovations — organization form, labor finance, marketing, and corporate governance.

Williamson concluded that entrepreneurship is an important but poorly understood subject – “poorly understood,” he said, “because it is intrinsically difficult and has remained analytically intractable since the term was first coined in 1755.”

In response to an audience question about the challenges of contractual relationships, he pointed out that the Chinese realized long before their US counterparts how important it is to maintain good relationships with outside contractors and that building up a reputation of trust is a valuable asset.

Williamson was introduced by his former Berkeley-Haas student Brian Silverman, PhD 96, now a professor of management at the University of Toronto’s Rotman School. Silverman summarized Williamson’s Nobel Prize winning work in two main parts: Williamson pioneered an entirely new way to analyze business transactions and he then applied this way of thinking to a wide range of fields, ranging from commercializing innovations to international business.

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